About the Program
Beginning in the Fall Semester of 1997, the Department of Finance introduced a new undergraduate business curriculum---The Financial Analyst Program (FAP). Currently under the direction of Professor Kelly Kamm (Ph.D. Finance), this one year program provides an opportunity for a select group of outstanding finance undergraduates to work closely with finance faculty and industry professionals to develop their skills and experience as analysts. Students are offered intensive, "hands-on" experience in applying the concepts of business analysis and valuation to decision contexts similar to those in the business world.
To be considered for the program, students must have already been accepted to the McCombs School of Business; also the program is limited to those students choosing finance as the major area of study in business. Students apply for the program early in the fall term a full year prior to their final academic year; for most students, application will occur early in the junior year. A limited number of students may be pursuing a degree plan that requires slightly more or less than four years in residence at the University of Texas. These few students should also apply in the fall term a full year prior to their graduating year.
In the spring of the junior year, the student analysts who are accepted into the program enroll as a cohort in a security analysis course (FIN 377.3) designed exclusively for them. Cases are used to present practical problems and issues in investments, financial services, and corporate finance and to develop the students’ oral and written skills. Students learn to assess the operating, financing, and investing performance of a company as well as make financial projections, relative to both the company’s recent operating history and its peer group of competitors. Along with the academic component, the undergraduates gain hands on experience as financial analysts. The students serve as analysts for the approximate $15 million MBA Investment Fund and thereby increase their practical experience in the fundamental analysis and valuation of companies and their industries. Specifically, the student analysts are responsible for studying and presenting their opinions on different equity investments to the Fund’s MBA student managers and investment professionals. By working under the guidance of faculty, investment professionals, and MBA Fund Managers, Financial Analyst Program students acquire advanced skills in financial research, modeling, and asset valuation.
The fall term of their senior or graduating year, the student analysts enroll as a cohort in a finance practicum course (Fin 366P). Financial Analyst Program students will have just completed a finance internship prior to the start of the fall term. Upon returning to campus, program participants will assess their past summer performance and analyze strengths and weaknesses as well as future career goals. During the second term in the program, students continue honing skills via the academic and applied learning environments. In addition to the advancement of solid quantitative skills, students focus this term as well on the topics of leadership and ethics in the field of finance. Students continue assessing industries and investment opportunities under the direction of faculty, investment professionals, and MBA Fund Managers. Students receive internship credit for the practicum course and by the end of the fall term of the graduating year will have completed the Financial Analyst Program. To graduate as a member of the Financial Analyst Program, a student must have completed both Fin377-3 and Fin366P in good standing, remain a finance major, and uphold the analyst commitment outside of class. The final spring term of the graduating year, program participants are able to provide service back to the program by volunteering to mentor incoming juniors.
Skills developed in the program include:
measuring performance using financial statements, cash flows, and market data;
developing pro forma forecasts of sales, earnings, cash flows and financial statements;
estimating investment risk and quality; estimating the cost of capital;
valuing financial assets such as common stock and fixed income;
running various sensitivity analyses on discounted cash flow models;
becoming familiar with various trading multiples and their advantages and limitations;
advancing further one’s leadership, presentation, and decision-making skills.
This program represents a major, one-year commitment that requires a significant amount of group work outside the classroom. To be eligible to apply, a student must be classified as a junior. In addition, candidates must have completed the following courses prior to starting the program: FIN 357, ACC 311 and ACC 312. The course FIN 367 shall be completed prior to the start of the program or may be taken concurrently with FIN 377.3. Interested students need to submit a written application by the due date indicated on the application form. The application form is found under "Apply for the program". Each application is will be evaluated by a faculty committee, and those candidates who best satisfy the first round evaluation are then interviewed by the committee. Final selections are announced by the beginning of January or mid January. Application forms may be obtained directly from the finance department web site. (See the finance department, AIM, Financial Analyst Program, and then apply.) If difficulties arise when downloading the application, contact the Department of Finance, CBA 6.222.
Finance undergraduates at the University of Texas who are interested in further information about the FAP should contact
Dr. Kelly Kamm.
About the Fund
MBA Investment Fund, L.L.C.
The MBA Investment Fund, L.L.C. is the first legally constituted, private investment company to be managed by students. The Fund is a limited liability company registered under the laws of the State of Texas. It was created to enable MBA students in the McCombs School of Business at The University of Texas at Austin to obtain a real-world experience in the process of managing investment portfolios and in developing relationships with clients. The fund completed its initial offering on December 8, 1994 with $1.6 million invested by accredited investors under securities laws. As of March 2004, the Fund has approximately 65 investors and $13 million under management in three different investment products: a growth-oriented equity portfolio and a value-oriented equity portfolio, which are managed for individual and institutional clients, and an endowment portfolio, which support the activities of the AIM Investment Center. The endowment fund consists of an enhanced index equity portfolio and a fixed-income portfolio.
Created by Dr. George W. Gau, Dean of the McCombs School of Business and Founding Director of the EDS Financial Trading & Technology Center, the Fund provides a unique interaction between Texas MBA students and professionals from major national investment firms. Under the direction of Dr. Laura Starks, Bill McAdams and Sandy Leeds, a select group of 20 students each year work as student portfolio managers with investment counselors in the formulation of their strategy and making their portfolio decisions. They also report to an Advisory Committee comprised of faculty from the Department of Finance and leading members of the investment industry.
Neither the University of Texas at Austin nor the Board of Regents of the University of Texas has the authority or power to act on behalf of the Fund, to do any act that would be binding on the Fund or to incur any expenditures on behalf of the Fund. Neither the University of Texas nor the Board of Regents of the University of Texas shall be liable for any debts or obligations of the Fund.